Chinese capital outflow to continue

Wednesday, 8 June 2022

Pantheon right again.

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The latest Chinese FX reserves data for May suggest an improving backdrop for the currency, rising to $3,128B, from $3,120B in April. This brings to an end the longest streak of declines in reserves since 2016. But the data flatter to deceive. The gain in reserves came during a period of renminbi weakness, and was driven by currency and asset valuation effects. Absent euro appreciation, and a rally in US fixed income, May would have seen another decline.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.